Tax planning for Indian TDS on international payments

Is TDS applicable on foreign payments?

Any person responsible for paying to a non-resident, not being a company, or to a foreign company, shall deduct income-tax thereon at the rates in force.
Section 195 TDS on Non-Resident Payments.

Sl. No.	Nature of Payment
23	Payments for maintenance of offices abroad
24	Maintenance of Indian embassies abroad
25	Remittances by foreign embassies in India

Do we need to deduct TDS on foreign remittance?

If the payment is in the nature of Business income of NR recipient, it requires a TDS only when the NR recipient has a Business Connection/Permanent Establishment (PE) in India. However if the payment is treated as FTS then regardless of the Permanent Establishment in India, a TDS is required u/s. 195.

How can I file TDS for foreign payment?

Form 27Q is the statement of the return for the non-salary payments done to an NRI. The Indian buyer is required to submit the form 27Q at every quarter before the due date. As per the Financial Budget of 2016, on-Resident Indians who do not have a PAN number are not supposed to pay a higher rate of TDS.

What is the TDS rate on foreign remittance?

TDS / TCS RATES FOR F.Y. 2021-22 (Non Residents)

Section	Nature of Payment	Rates
195	Fees for Technical services where agreement is made on or after April 1, 1976	10%
195	Any Other Income	Non-Resident 30% Foreign company- 40%
196A	Income in respect of units on non-resident/ foreign company	20%

What is section 195 in TDS?

What is Section 195 of the Income Tax Act? Section 195 of the Income Tax Act, 1961, covers TDS deductions on transactions/payments of Non-Resident Indians. Any entity (resident or non-resident) who pays any amount other than salary to a non-resident has to deduct tax.

What is Section 172 of Income Tax Act?

Section 172 of income tax act is a special provision which deals with levy and recovery tax from foreign shipping companies. It specifies that every foreign shipping company has to declare a certain percentage of profit on its freight income and pay tax on it.

Who is required to deduct TDS u/s 195?

Under the provisions of section 195, any person who is responsible for paying any interest or any other sum chargeable to tax is liable to deduct tax at source. This is applicable in a case where the payment is being to a non-resident(excluding company) or a foreign company.

Is NRI liable to deduct TDS?

Act 1961 will have no jurisdiction over such a Non-resident. Therefore, the Non-resident will not be under an obligation to deduct tax at source from payments made to persons resident in India for professional or other services.

How do I report a payment to a foreign company?

Form W-8IMY (Certification of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for U.S. Tax Withholding) is used for reporting payments to “flow-through entities” such as foreign partnerships or trusts.

How can we avoid 5 TCS on foreign remittance?

Tax collected at source (TCS) at the rate of 5% shall be imposed on the money sent outside India under the Liberalised Remittance Scheme (LRS) of the RBI.
Rate of TCS on foreign remittance.

Particulars	Rate	If PAN is not submitted
Remittance in excess of Rs. 7 lakh	5%	10%
Remittance funded by education loan	0.5%	5%

What is tax collected at source for foreign remittance?

According to the recent amendments in the Finance Bill (2020), under the Liberalised Remittance Scheme (LRS) that came into effect from , TCS at the rate of 5% will be imposed on the money remitted outside India.

What is 15CA and 15CB?

15CA is a declaration made by Remitter. It has 4 parts depending upon the difference circumstances. 15CB is a certificate from a CA received by banks to ensure that applicable taxes has been deducted before the foreign remittance is made if the proposed amount is chargeable to tax in India.

Which form should be filed first 15CA or 15CB?

Note – Upload of Form 15CB is mandatory prior to filling Part C of Form 15CA. To prefill the details in Part C of Form 15CA, the Acknowledgment number of e-Filed Form 15CB should be provided. Step 5 – Click Continue. Step 6 – Fill in all the mandatory details and click “Submit”.

Is Form 15CB mandatory?

1. Overview. Form 15CB is required for payments made to Non-Resident, not being a Company, or to a Foreign Company which are taxable and if the payment exceeds ₹5 Lakh. Form 15CB is an event-based form and is required for each remittance that satisfies the condition laid.

Is 15CA mandatory?

Who is required to file Form 15CA? As per Rule 37BB, any person responsible for paying to a Non-Resident, not being a Company, or to a Foreign Company shall furnish such information in Form 15CA.

What is Form 15CA used for?

Form 15CA is a declaration of remitter and is used as a tool for collecting information in respect of payments which are chargeable to tax in the hands of recipient non-resident.

When should 15CA be filed?

Part C- Part C of the Form 15CA is needed to be filled when the remittance amount in the F.Y. exceeds Five Lakh rupees during the F.Y. and a certificate in Form No. 15CB from an accountant as stated in the description below sub-section (2) of section 288 has been obtained.

How do I file 15CA and 15CB?

Step 1 Taxpayer Login to e-Filing portal. Navigate to “e-File” menu and select File Form 15CA under File Forms sub-menu. Step 2 Taxpayer On selection of Form 15CA, PAN/TAN of Assessee is auto populated. Provide Financial Year, Filing Type and Submission Mode “Offline/Bulk”.

How can I prepare 15CA online?

Procedure for Submission of Form 15CA Online

Login to e-filing portal, Go to “e-File” – “Prepare and submit the online form (Other than ITR)”.
Select “Form 15CA” from drop-down.
Fill the requisite details according to the nature of the remittances. …
Click “Submit”.

How long is form 15CA valid?

Form 15CA can be withdrawn within 7 days of submission of the online form.

How do I file Form 15CA manually?

Step 1 Fill Form 15CA in the downloaded offline utility for Forms submitted manually earlier and generate xml(s). The xml(s) to be zipped in a folder. Step 3 Navigate to menu >> e-file >> Income-tax Forms >> File Income-tax Forms and select Form 15CA. Select “Manual” radio button and click on the continue button.

Is Form 15CA mandatory for import payment?

Rule 37BB has been amended by Notification No. 93/2015 issued by CBDT on 16th December 2015, effective 1st April 2016 to make import payments as a part of exempted list. Hence, Form 15CA and Form 15CB will not be required for import of goods transactions.

Is DSC required for 15CA?

Note: For TAN Users DSC is Mandatory to file Form 15CA.

Is 15CB required for 15CA Part D?

Form No. 15CB will only be required for payments made to non-residents, which are taxable and if the payment exceeds Rs. 5 lakhs.
Rule 37BB.

Sl. No.	Nature of Payment
5	Indian investment abroad -in real estate
6	Loans extended to Non-Residents
7	Advance payment against imports
8	Payment towards imports-settlement of invoice

Who is Authorised dealer in Form 15CA?

For the purposes of this rule ‘authorised dealer’ means a person authorised as an authorised dealer under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999).]